Scotiabank, BMO domestic strength offsets international weakness
By Cameron French
TORONTO (Reuters) - Bank of Nova Scotia (BNS.TO: Quote) and Bank of Montreal (BMO.TO: Quote) kicked off the reporting season for Canadian banks on Tuesday with slightly stronger-than-expected results that highlighted the resilience of their domestic franchises but weakness in international operations.
Despite concerns that a cooling housing market in Canada would dry up growth in loan profits, domestic lending income was up at both banks, likely helped by home buyers rushing to lock in cheap mortgages before rates move higher.
That compensated for international banking income that fell short of expectations and pressured the shares of Scotiabank, the most internationally focused of the country's banks.
"The story for the quarter so far is strength in Canada and weakness outside Canada," said Peter Routledge, a banking analyst at National Bank Financial.
Scotiabank, Canada's No. 3 lender, posted a 17 percent jump in profit after stripping out the impact of last year's sale of the bank's main Toronto office tower, a deal that added C$614 million to 2012 results.
On a net basis, the bank earned C$1.8 billion, or C$1.37 a share, down from C$2.1 billion, or C$1.69 a share.
Excluding items, it earned C$1.32 a share, exceeding the C$1.30 average estimate of analysts, according to Thomson Reuters I/B/E/S.
Scotiabank also raised its dividend for the fourth time in two years, boosting its quarterly payout by 3.3 percent. Continued...